Reporting under CARO – Significant Observations by FRRB of ICAI
- Blog|News|Account & Audit|
- 2 Min Read
- By Taxmann
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- Last Updated on 20 March, 2023
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The Financial Reporting Review Board (FRRB) of the ICAI conducts reviews of financial statements and audit reports of various enterprises to determine whether the compliance with the Generally Accepted Accounting Principles (GAAP), auditors reporting obligations, disclosure requirements of applicable rules and regulations relevant to the reporting enterprise has been done or not.
While reviewing the Companies (Auditor’s Report) Order, 2016, the Board has noted non-compliance w.r.t. clause 3(viii), (ix), (x) of CARO in reporting of repayment of the loan, utilisation of funds, & fraud and extended its observations and views on the matter of reporting. It is recommended that the Auditors while reporting under CARO 2020 should consider the following points. Some of the observations along with the reporting done by the auditors on para 3(viii)/ (ix)/ (x) of CARO 2016 have been discussed in the story.
1. Matter contained in the Auditor’s Report: In our opinion and according to the information and explanations are given to us, the Company has not defaulted in the repayment of dues to financial institutions, banks, and debenture holders
2. Relevant Provision: Whether the company has defaulted in repayment of loans and borrowing to a financial institution, banks, government, or dues to debenture holders. If yes, the period and the amount of default to be reported
3. FRRB Observation: The financial statements disclose that the company had not borrowed any funds from Banks, Financial Institutions (FIs), and Government. The only borrowing that the company raised was in form of debentures which were issued to the holding company. Therefore, reporting made by the auditor as to “no defaults” has been made by the company in repayment of dues to FIs, and banks is not correct.
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